September 8, 2025
Welcome to Perspectives, a signature podcast series from The Leerink Center for Pharmacoeconomics. Hosted by Dr. Mel Whittington, a health economist and Head of the Center for Pharmacoeconomics, we will be hearing from individuals across the industry to better understand and appreciate the societal impact of healthcare innovations.
Mel Whittington: Today I’m joined by two scholars from the Intellectual Property Policy Institute at the University of Akron School of Law, Joshua Kresch and Emily Michiko Morris. Joshua and Emily, thanks for being here today.
Emily Michiko Morris: Thank you.
Joshua Kresh: Thank you, Melanie.
Mel Whittington: Yeah, you know it’s not every day that you get to sit down and talk to two experts in intellectual property. And so, I want to take advantage of that opportunity and hear from you both about the role of intellectual property in this kind of larger biopharmaceutical innovation ecosystem. And, you know, I also always like to get into some spicier topics. And so, I want to get into evergreening and patent thickets and discuss some of the recent research that you all have led about those topics. But first, I want to learn about you both and what got you both interested in specializing in something so specialized as intellectual property. I always find it fascinating to hear about how people chose the field that they chose. So, Joshua, would you be willing to tell us what makes you so excited about intellectual property?
Joshua Kresh: Sure. I was, you know, not that uncommon in this field. I was doing a PhD in my case in computational biology by informatics. And I decided I didn’t want to my entire career in a lab working on one project that, if you succeed, you get a Nobel Prize. That’s great. If not, you spend 30, 40 years and look back and say, what did I do? And I wanted somebody to use the science background, but to be jumping across topics and have a broader impact. And IEP came up as a pretty good way to do that. So, I left the PhD program, went to law school and have been excited about it ever since.
Mel Whittington: Okay. What about you, Emily?
Emily Michiko Morris: So pretty much the same story. I was a pre-med as an undergrad, majored in biological anthropology, but took all the pre-med classes, but realized that I didn’t want to be a doctor. And so, this seemed like a perfect way to make use of that knowledge, but also to be in the law and never thought I would want to be a lawyer, never thought I’d want to go to law school. Here I am teaching law now. I’m just very excited to be working in this particular area.
Mel Whittington: Wow, very cool. And this Intellectual Property Policy Institute, what type of work do you all do? I feel like that’s a pretty unique institution.
Emily Michiko Morris: Yeah, I’m going to defer to Joshua on that as he’s our executive director. So, he has a broader idea of what it is exactly we do.
Joshua Kresh: And so, we study how IP policy and laws impact innovation and creativity. We’re looking at the law, really what is the law, the practical implications of it? So, we do some ivory tower research that’s part of academic life, but that’s not our main goal. Our main goal is to see, you know, what do changes, whether recent court changes or potential laws, how are they going to impact things and are they going to move things forward in a way that helps innovators and creators, or are they going to slow things down? And if they’re going to slow things down, are there reasons why they might be worthwhile or are they creating more harm than they’re helping?
Mel Whittington: Very cool. You know, I appreciate all the work you do. I enjoy the emails that you all send out and the research that you do that does have this generating evidence, academia type tone, but also this real practical application about how can we impact the world positively and how can we improve policy and ensure incentives for innovation. So given that fascinating background, I do want to transition a bit into kind of this foundational knowledge about intellectual property and biopharmaceuticals. I can’t think of two people who are better suited to provide that. One goal of this podcast is to talk to the lay person about topics that are usually not talked about, things that are usually more so reserved for specialized centers like the Intellectual Property Policy Institute. And, you know, areas of interest for me and the Leerink Center for Pharmacoeconomics are around incentives for innovation and the life cycle of a drug and the various market dynamics at different points across that life cycle. And intellectual property, in my opinion, plays a huge role in both of those things. And I actually don’t think you can understand either of those things, incentives for innovation or, you know, market dynamics across the life cycle of a drug without fully understanding intellectual property. So I want to ask you all about kind of this foundational knowledge and starting out with what is intellectual property and how is it protected?
Emily Michiko Morris: Sure, I think I can jump on that one. So intellectual property is actually a couple of different areas or specific areas of law. And really what we’re doing with intellectual property is we’re granting innovators and creators some sort of ownership rights in what they create, what they’ve invented. And so, a lot of people, when they think of intellectual property, they think of monopolies, but it’s really not a monopoly. It’s just some very limited ownership rights over what you’ve created, literally. And it’s supposed to not only give you an incentive to continue innovating and continue creating, but to also give you an ability to get some sort of profit, if that’s what you’re looking for, or have some sort of control, exert some sort of control over what you’ve created. And so, it’s really about recognizing the investment of time, labor, effort, genius, whatever it is, into what you’ve created. And so, there are really four main types of intellectual property. There’s trademark law. Most people are familiar with trademarks. Copyright. Patents. I think that’s probably the one that people are least familiar with. And then trade secrecy. And so, for the biopharmaceutical industry, really the two most important are going to be patents and trade secrecy, depending on what kind of biopharmaceutical innovation they’re working on.
Mel Whittington: Okay, so what is a patent in simplest terms for us non-lawyers?
Emily Michiko Morris: So absolute simplest terms. So, it is the right to prevent others from making, using, selling, offering to sell or import what you have invented and what you have patented. It’s not an affirmative right to make, use or sell what you’ve invented just to keep others from doing so. And it lasts for only 20 years from the date that you file your patent application with the patent and trademark office. So, of the different types of intellectual property, it is by far the shortest lived type of protection. But it’s fairly important for people who invent and invest in inventing and in many instances, more importantly, who invest in bringing what they’ve invented to the market. Because again, it gives you that right to protect what you’ve invested in your invention.
Mel Whittington: Understood. Maybe that’s a good segue to focus then on biopharmaceuticals. Biopharmaceuticals, our last podcast episode was with Ulrich Neumann from Johnson & Johnson. We talked about his recent research on just the amount of money, amount of R&D and this private capital that’s required to bring a new drug to market. It does require a ton of investment. It requires risk. So therefore, during some period of time, there needs to be a protected period of time to generate a return on that investment. And so, I’m hoping you can tell us, now let’s think about intellectual property, patents, the other three types that you all talked about. Why is that important for biopharmaceuticals specifically?
Emily Michiko Morris: Yeah, so biopharmaceuticals, almost no matter whom you ask, biopharmaceuticals are the one industry in which we think the patent system serves the purpose that we think it ought to be serving, right? That the biopharmaceutical industry is uniquely dependent on patent protection for exactly the reasons you mentioned, because it takes so many billions of dollars to develop drugs and more importantly, to test them and make sure that they’re safe and effective enough to actually give to patients but also because it takes years and years, on average anywhere from 10 to 11 years, depending on the kind of biopharmaceutical you’re talking about, to develop. And so if you’re going to risk your money for such a long period of time in a field that has such a high failure rate, just because it’s so difficult to predict what’s going to be safe enough, what’s going to be effective enough to be approved by the FDA, you really need some sort of protection for your investment because exactly as you said, you’ve got private funds that are really behind all of this and so you really need to have some sort of way to protect those funds.
Mel Whittington: Very fair, you know, I heard that Elon Musk makes Tesla patents open source. And you know, he’s been quoted saying “patents are for the weak”. But then I was listening to him on a podcast or a snip from him on a podcast where he specifically called out situations where patents are necessary. And the example he called out was for pharmaceuticals where it can cost a billion dollars to do a clinical trial or more. But then subsequently, if the drug gets approved, it could potentially be manufactured for extremely cheap. And so, we understood that if the drug can be immediately copied for cheap right after approval, then no one’s going to make those billions of dollars of investment to get the drug to approval. And so, I appreciate you calling out that everyone kind of agrees that with biopharmaceuticals, patents are essential and it makes sense.=
Emily Michiko Morris: Absolutely, yeah. And especially in the last, was it now 40 years, 41 years since we passed what’s called the Hatch-Waxman Act, formerly known as the Drug Price Competition and Innovation Act. But you can see why we call it the Hatch-Waxman Act. But especially since we passed that back in 1984, part of the goal of that law was to make it easier for generic manufacturers of drugs to make copies of what we call small molecule drugs. Because they are relatively easy to copy, generics can manufacture them at cost and sell them at cost. And now that it’s so much easier for the generic manufacturers to get FDA approval for their copies of other people’s drugs, it really is important for the innovators, the brand name manufacturers to have that patent protection, to give themselves some period of time in which to try at least to recoup some of their research and development costs.
Joshua Kresh: And that’s really important and it can get into the weeds so I wouldn’t go too long on it. But I think it may help for the audience to briefly explain what it takes for a new drug to get approved versus what it takes for a generic to get approved and why that matters.
Emily Michiko Morris: Yeah, absolutely. So, for a new drug, typically you’ll have, and this is just for those small molecule drugs. So, these are relatively simple molecular entities that you can draw on a chalkboard if you’re a chemistry professor and relatively easy to copy using chemical means. But typically, what happens when you’re trying to develop one of these small molecules into a drug is that you’ll have to screen anywhere between 5,000 and 10,000 compounds to see which ones might be likely candidates for being able to be used safely and effectively again in human beings. And so, you go through the preclinical process of trying to narrow down which of those compounds might actually be worthwhile, using that either in cell cultures or in some cases in animal populations. And then you eventually whittle it down to maybe one to five compounds that seem like likely candidates. And then you begin what you mentioned, clinical trials, right? And clinical trials are in humans, and they go in phases. And so, the first phase typically is in healthy volunteers. We’re just testing the safety of the compound at that point. Then you move into testing it on patients who actually have the particular symptom or condition that you’re trying to treat with the compound. And then you go through another phase even after that and expand the number of patients you have in the study. But the clinical trials themselves can take anywhere from six to nine years. And exactly as you mentioned, that really is the most expensive part of the drug development process. So, I’ve seen estimates that say that it’s up to 70% of the overall cost of developing a new drug. And so, you can see you’ve already had thousands of failures, right? Thousands of compounds that turned out not to be good candidates. And then you take the compound through these clinical trials, you’re gonna have a particularly high failure rate there as well. And so, if you’re lucky, in the end, after again, several years of investing in this compound, you may identify one that is actually safe enough and effective enough to get that FDA approval actually to be used in patients. And so, this is a particularly involved process, a particularly expensive process, but also one that’s vital to making sure that the drugs we have on the market, the drugs that are being prescribed by doctors, actually work and actually are safe enough to be used.
Mel Whittington: Fascinating. That’s the process. That’s a big process. That’s the process for initial approval, brand new innovation. I’m inventing a product, I’m coming to market. I’m assuming the process is quite a bit simpler for a small molecule generic.
Emily Michiko Morris: Yeah, so now, again, after the Hatch-Waxman Act was passed in 1984, it’s much easier for generic manufacturer to get FDA approval for their copy of a drug that’s been previously approved. So, it used to be before 1984 that there were very few generics on the market because they didn’t do the kind of clinical trials that I was just talking about. It was too expensive for them to do those kind of clinical trials, and it probably would have been unethical for them to do so. And so, because they weren’t doing these clinical trials, they could not prove that their generic versions of a drug were safe enough and effective enough for FDA approval. After 1984, after the Hatch-Waxman Act, they have what’s now called an abbreviated new drug application, which very importantly allows them a right of reference to the clinical trials data that has already been submitted to the FDA. So now they don’t have to do their own clinical trials. And so, it’s much easier for them to get FDA approval. And it also saves patients quite a bit of money because now the generics don’t have to try to recoup the investment they otherwise would have had to have made in clinical trials testing. And so, this really benefits everybody, right? It benefits the generics, and it benefits the patients. And so there really is a huge difference in the amount of investment that the originator drug manufacturer and the generic manufacturer have to make in order to reach the market.
Mel Whittington: Interesting. You know, I’ve heard so much praise about Hatch-Waxman from, you know, pharmaceutical trade associations about how this really does a good job balancing incentives for innovation, giving that initial innovator a protected period of time to generate a return and keep incentives for innovation going, but also ensuring soon after patent expiration, generic entry that can then substantially drop the price which as you mentioned is great for patients, great for society. And so that’s why I think Hatch-Waxman and these concepts that are usually not talked about to a lay person are so important to be talked to, to a lay person because in a world where it’s so easy to think that drug prices are all really high and for branded drugs during that patent protection period, their prices are usually really, really high. But the vast majority of drugs that are filled are generic drugs and those are intended to be very cheap. And not only are they intended to be cheap, but there are laws that make it so this process should occur like Hatch-Waxman, et cetera. Would you agree with that?
Emily Michiko Morris: Absolutely, absolutely. Yeah, so that I think is one of the biggest successes of the Hatch-Waxman Act is that it really obviated the need for the generic manufacturers to have to do their own testing. They can enter the market now after patent expiration and allow a lot of people who might not otherwise have access to the drug to have access to it. And exactly as you said, the estimates now are that 90% of prescriptions are filled with generic versions of a drug. And so that really has been a game changer in the pharmaceutical world.
Joshua Kresh: Another factor I’ll add on the generic, it’s not really, well, it’s not directly a patent thing, but most states have generic substitution laws. So, generics don’t even have to advertise, they don’t have to tell doctors, “Hey, we exist”. Doctor will write the prescription for the brand, and if the generic exists, when you go to the pharmacy, they’ll give you the generic at the cheaper price. Which means generics that don’t have, you know, it cuts off additional cost of having to advertise and other things the generics wouldn’t want to spend money on, and they’d have to raise prices if they did. So, that’s factor to consider.
Mel Whittington: Yeah, I was previously involved in a study where we interviewed some generic manufacturers and some biosimilar manufacturers and talked to them about, you know, what is your pricing strategy or how do you come up with a price? And it overwhelmingly, we heard from them that it is this kind of cost of goods plus a small profit margin. And, you know, I think that explains what you were saying, Joshua, of it’s they don’t have to invest a ton in marketing or sales where there are these processes that kind of can do that for them on the back end. And then it can ensure that prices do get down pretty cheap of a cost of goods sold plus a profit margin. And for small molecules, cost of goods sold seem pretty darn cheap.
Joshua Kresh: Yeah, I’ll just add, we’ve been talking about small molecules. There are similarities with biologics, but there’s also lot of differences and a lot, it’s more complex, which probably would require its own podcast to go into the detail because there’s a lot of difference there, but everything we’re saying really applies to small molecules and then tangentially to large molecules.
Mel Whittington: Got it. Okay, well, I feel like then you’re willing to come on another episode and for us to dig deeper into biologics and biosimilars. I want to kind of click back on one thing Emily said about patents are good for 20 years. A drug developer or someone coming up with a new drug, when do they typically file for a patent?
Emily Michiko Morris: So that, think, is very important for your listeners to understand because they have to file for a patent much earlier than you would have thought otherwise. So, they don’t wait. They can’t wait until they’ve actually proven that the drug is safe enough and effective enough for approval. They instead have to patent it before they even begin clinical trials testing. Otherwise, they might lose the eligibility to get a patent at all. So pharmaceutical companies won’t invest in clinical trials unless they can get a patent on those compounds before clinical trials testing. And so those are typically gonna be your strongest patents because there’ll be patents on the compounds themselves, but there’ll also be your shortest-lived patents in terms of how much patent life do you actually have remaining once you’re finally able to go on the market and start earning some returns on your investment. So again, I think it’s very important for your listeners to understand that the strongest patent protection is in many ways also the weakest patent protection because it’s the shortest in duration.
Mel Whittington: The shortest. And so, if it typically files before clinical trials, and I think you said average clinical trial duration six or seven years, that means kind of that effective patent life from initial market entry on that kind of strongest patent is around 13 to 14 years.
Emily Michiko Morris: Yeah, and that’s what I think a lot of empirical research, including Joshua’s and mine, has shown repeatedly. And this has remained the same for decades now, that the effect of patent life on average is somewhere between 12 to 14 years, depending on what study you’re looking at.
Mel Whittington: Okay, here’s an interesting question. Why do patents even expire?
Emily Michiko Morris: Well, patents expire because we want the invention to go into the public domain. And we want people to have access to the invention mainly so that they can start making their own inventions because technology is cumulative. And most inventions are based on previous technologies. And in the biopharmaceutical world, we also want patents to expire because eventually we want the drugs to be available in generic form. And so that’s yet another reason we want it to be accessible to the public. And this is, increases social welfare and that knowledge goes into the public domain after the patent expires.
Mel Whittington: Yeah, I love the fact that patents expire. It’s a win-win for society for multiple reasons. One, it should enable low-cost generic versions to ensure and substantially reduce costs. It also means that these for-profit companies developing these drugs have to continuously keep on innovating to generate additional revenue that eventually the patents will expire and their profits on that drug will expire. And then they’re going to dedicate resources to a pipeline. And so, then allows us as a society to get more and more and more health care innovation and hopefully have a future that is even better than our current.
Emily Michiko Morris: Absolutely.
Joshua Kresh: And I think the innovation is key because people think about pharmaceutical innovation and kind of look at one type and tend to ignore downplay the second type. So, one type is just new molecules, new treatments for maybe new diseases. Clearly innovative, has nothing to do with whatever the current drugs on the market are. It’s an entirely new product. That’s important. That’s vital. We should certainly be encouraging that. But the other type of innovation is improvements to products that already exist, which is also really important, really helpful for patients and a key part of the pipeline that often gets misconstrued or misunderstood. And that leads to some of the talks of evergreening and thickets, which I think are misunderstanding what’s happening there based on oversimplifying things that aren’t necessarily that simple. So hopefully we can kind of explain why those aren’t what they seem to be and why this matters.
Mel Whittington: Yes, okay, I think that’s a great segue, great tangent. Before we get there, I think this will also segue us. A drug can have multiple patents, right?
Emily Michiko Morris: Absolutely, yes.
Mel Whittington: Some of these happen like before market entry, some of these happen after market entry. What are some reasons for all of these additional patents, which I think will get us to the evergreening in patent tickets?
Emily Michiko Morris: So, some of it’s exactly what Joshua said. Some of it is even after you have the molecule approved or even if you think that it’s going to be approvable, it’s looking like a good candidate, there’s still a lot of things that you can do to improve that drug. So, you can switch it from a drug that has to be given intravenously, which requires the patient to go to a clinic, sit often for hours receiving the drug. And if you can change that drug from an intravenous form to an oral form or even a subcutaneous form, that becomes much easier for the patient because now they can administer it to themselves or at least they don’t have to sit there for hours in an IV clinic receiving the drug. For other drugs, and I know this is the case with Omeprazole, which was kind of a pioneering drug in its day for the use, for treating people with ulcers, stomach ulcers. They discovered that it worked particularly well for the particular biological pathway that they were using to treat ulcers, but that once a patient took it, the stomach would digest the drug before it ever had a chance to be absorbed into the bloodstream. So the people who invented Omeprazole had to spend years trying to figure out how to formulate this drug in a way that it could be taken, could be ingested and metabolized by the patient, but not destroyed by the stomach acids before it entered the bloodstream. And so, all these kinds of secondary innovations or sequential innovations that are really necessary, A, just to bring the drug to the market in the first place, and B, to make it even more accessible to patients and even easier for patients to use.
Mel Whittington: So, do each of these subsequent patents, does that tack on another 20 years to the effective patent life and delay time to generic entry by 20 years?
Emily Michiko Morris: No, so that’s another, I think, fallacy that the public seems not to understand about drug patents. So especially with small molecule drugs, these simpler drugs that we’ve talked about, again, the earliest patent that you’re going to have on the small molecule drug is typically on the compound itself. Once that patent expires, and again, that patent’s going to expire often much less than 10 years after the drug finally hits the market, once that patent expires, anyone else can copy that molecule. Now, if there are other patents or other innovations that are necessary simply to deliver that compound to a patient to create a usable drug product, the generic manufacturers may have to be able to copy those other innovations. That was the case with the Omeprazole. But for most of these innovations, especially the kind that Joshua was talking about, where it’s really about improving the patient experience, improving patient compliance, reducing side effects, these are all innovations that don’t have to be copied by a generic manufacturer if they want to enter the market once the original compound patent has expired. And so, a lot of the later patents, for example, are on new indications, new ways of using the drug to treat new symptoms, new conditions. Those certainly don’t have to be copied by the generic manufacturer. And in fact, even if those patents are still in force, doctors can still prescribe the generic version of a drug for use in those other indications, those other symptoms or conditions. This is what’s called off-label prescribing. But really, it’s that compound patent that is the most powerful. And once it expires, there’s very little keeping the generic off the market.
Mel Whittington: Got it. And that compound patent, as you said, that’s the kind of one that starts around six years prior to market entry if it actually gains regulatory approval and enters the market. And so, it has about a 12 to 14 year effective patent term after market entry.
Emily Michiko Morris: Exactly.
Mel Whittington: OK, so let’s, get into evergreening and patent thickets. What do these terms mean?
Joshua Kresh: So, every greening is the idea that when the primary patents or the first patents are getting ready to expire, drug companies will often look at ways to improve, file additional patents, maybe change the drug, and then they’ll continue to have exclusivity on the new drug. And the new one is important because what usually happens there, and there’s some examples earlier on, that we can get into where it didn’t always happen, but usually happens there, is generics enter on the early version. Yes, the brand still has a drug out there with protection, but it doesn’t stop generics from the old version. If people want the old version for cheaper, they can get that. So, evergreen really isn’t a thing now. Now, where there’s a little bit of complexity is when brands have the new version, they can keep the old version on the market or they could, and in the past, they sometimes did just drop it off. And that was the so-called hard switch and soft switch. Almost everything now is the soft switch to keep the old one on. If they keep the old one on, generics can still go through the ANDA and get in and still get the substitution on the old one. If they hard switch and tell all the doctors, “hey, use the new one, we’re not selling the old one at all”, then it becomes harder for the generic to enter on the old one. So that was where that concern was. It was a thing in a couple of cases years ago. It really isn’t a thing now. So, evergreening is, if you look at the patterns you can see why people might be concerned about it, but it just doesn’t actually play out. There’s really no evidence of it happening in any kind of scale that should be concerning us.
Mel Whittington: Yeah, and you all have done a lot of research specific to this area, right?
Emily Michiko Morris: Yes.
Mel Whittington: Yeah, so these aren’t just claims that you all kind of have the receipts and the data to back these things up. that was, I’ve recently started reading your work. I started at the Leerink Center for Pharmacoeconomics about a year ago. And Joshua was one of the people who I first met kind of in this role. And so, I followed your work, and I’ve been fascinated by so much of your evidence is debunking some of these myths and some of these myths that I thought they were true and then I see the evidence to support something else. I consider myself, I always enjoy reading your work. So, these additional patents, what does your research show about how it actually delays time to generic market entry? Because there is this difference that I’m guilty of not fully understanding the nuances until I’ve read some of your research of there can still be a patent over a branded drug, but that may not actually delay generic entry. And I know we’ve talked about some of those nuances already, but because I think this is a complex topic, but it’s also really important. Have you all done research on kind of all of these additional patents and whether this actually effectively delays generic market entry?
Joshua Kresh: We have, and the short answer is it really, in most cases, doesn’t. Now, can we find a few examples where it probably does a little bit or what it seems to? Because there, it’s unclear, it actually stopping where generics not entering for another reason? We can’t really ask them. It’s like, “hey, why haven’t anyone brought this?” You can look at, have there been suits? And you can try to make a guess at it. But for the most part, what we found, the additionally later file patents that are added to the Orange Book do not change that 13 or so year window in any meaningful amount.
Mel Whittington: Interesting. I want to pivot a little bit to the area of interest that excites me, and that’s building pharmacoeconomic models to estimate the long-term impact of healthcare technologies on things like cost and health outcomes. Core to these models that I build are a drugs price. A drugs price, as we’ve already talked about, can be dramatically different from this patent protection period to after this patent protection period. During the patent protection period, a drug’s price is often high, sometimes really, really high. And it’s during which exact copies can’t be marketed and the inventor is able to generate a return on their investment. But then following patent expiration, generics or biosimilars can enter and these dynamics in price are important for investor models, they’re important for health economic models but require kind of estimating this length of exclusivity or duration of time as to which generics will enter. But when these models are built, health economic models are often done around the time of regulatory approval, investor models can be done many years ahead of regulatory approval, that information may not be known. And so, based on all of your work, do you have a recommendation for what these modelers should use about the average time to generic entry between market entry and initial generic entry? What’s the average time?
Emily Michiko Morris: So, as we’ve been discussing, the average time, at least from our study, was about 13.3 years. Again, that’s very consistent. And so, I think, at least for the top selling drugs, that’s very consistent. So, Joshua, I think, quite astutely came up with this study that we have done, where we looked at the top selling drugs from 2012 to see when generics eventually enter the market on the idea that since it’s been 13 years, there’s plenty of time for generics to enter the market. But also, because they’re the top selling drugs, they’re the ones that generics are most likely to want to enter the market for.
Mel Whittington: I’ll also say those are probably the ones with the largest budget impact too, given their top selling and probably have a…
Joshua Kresh: Right. And they’re also ones where if a company could extend the life, they’d want to because they’re the big sellers. So, if they’re not extending there, it means they probably aren’t easy tools to extend, or the companies just don’t know how to use them. So, I think that’s some of those concerns of extending seem, you know, it’s hard to entirely disprove, but it seems highly unlikely. You know, if you can’t do with your best products, you’re probably not doing with products that no one’s buying.
Emily Michiko Morris: And so going back to your question about pharmacoeconomics, and I have to say drug pricing is not my area of expertise, but given that you can fairly reliably expect that your flagship drugs will go generic within that 12 to 14 year timeframe, that’s the model around which you have to base your pricing decisions. And so, during that time period, if you have a flagship drug, you want to hopefully try to recoup not only the research and development dollars invested in that drug, but also in all the other drugs that aren’t quite as profitable, right?
Mel Whittington: Or that never even make it to market.
Emily Michiko Morris: Exactly, yes. So, for the drugs that the, all the failures that you have to go through to get to the successful drug, but even after a drug is successfully approved, the pharmaceutical industry tells us about 70% of those drugs never actually recoup the research and development costs for their own development, right? And so, you’ve got those flagship drugs that are really carrying the weight for the rest of the enterprise.
Mel Whittington: Yeah, that distinction is something that is, I’m embarrassed to say, is a relatively new learning for me of this kind of portfolio thinking of research and development and biotech investment of, yes, it does seem like when one single drug, you can see this really, really high price and you’re like, “is that too much?” How much really was the R&D for that drug, but it’s not only for that one drug. It’s really this cross portfolio thinking of there are some that are launched that are not commercial successes, as you suggest. Then there are many that are never launched and never generate any revenue. And so, I don’t really have a good way to think about that in my modeling that’s still pretty specific on one drug, thinking about what all did it take to get there, not only for that product, but for all of the things that, that we aren’t paying for the pharmacy counter.
Emily Michiko Morris: Yeah, absolutely. And I think your way of phrasing it as a portfolio is spot on because not only are you trying to recoup your costs generally as a company, right? And not just on a specific drug. It also appears again, not an expert on pricing in the pharmaceutical industry, but it also appears that prices are based on what the market will bear, right? Not on how much did we have to spend to develop this drug or other drugs that are in our stable. And in fact, when companies decide how much to invest in further research and development, it’s purely on a prospective basis. So, they look at how much revenue they’re earning today, and based on that revenue, they decide how much they’re going to invest in research and development in the future. So quite the opposite of what most people think. Pricing is not really so much a reflection of past investments, really it’s revenues that are predictor of future research and development investments.
Mel Whittington: Got it. And one thing I love about the health economic models, like pharmacoeconomic models that I like to build is it can acknowledge uncertainty or variability. So, using your estimate of the 13.3 years and then, you know, Joshua’s point, some are longer than that, some are shorter than that. And, you know, so I don’t think we have to be exact. We can account for variability and account for uncertainty, acknowledging that there will be some situations where it’s longer than that and there will be some situations where it’s shorter than that. And so being able to account for uncertainty and variability in a model, I think is a real strength. But having evidence informed estimates about, what point estimate might be most appropriate and what is a plausible range to vary it on, I certainly appreciate and now have sources for that based on your guys’ work.
Joshua Kresh: I realized we talked about evergreening. I kind of skipped over the thickets question, which I’ll try to quickly answer that. So, the thickets is an idea from patents that really started out in the tech space. how it was described in technology has nothing to do with how it’s described in Biopharma. The idea in tech was that for a cell phone, you might have 10,000 patents with 500 companies that have those patents. So, if you’re trying to release a new product that covers all of that, you have to then go make deals with 500 different people. It’s really complicated. It’s messy. One person might slow you down. Turns out that doesn’t actually work out. The deals work out pretty well. Most of that stuff has not proven out at all. But then it kind of got translated into Biopharma to say, the number of on a drug will impact how hard it is for a generic to enter. And we’re talking about not 10,000 patents, but like four patents or five patents sometimes. And sometimes those five patents are actually relatively similar. And if you’ve litigated patents, which I did for a while before I became, an academic, you’ll see that, especially when the patents are similar, adding other patents, it doesn’t add much to fight them. So, whether I’m litigating into four patents in the same family or one, the cost difference is minimal, so it really doesn’t slow you down. And the other one is, course already limit cases. So, let’s say I did have a hundred patents, and you tried to introduce a generic and then we start the process and I’m suing you over it. The district court is going to say, you can’t actually file a hundred patents, a hundred claims. You’re to start with this number. And then as we go through the trial, I’m going to limit it more and more. Usually, the time you get to trial, you’ll have like 10 claims. So, no matter how many patents you have, you’re only going to have to use a small subset of that. So, the idea that having, you know, 10 patents or five patents is going to really affect whether generic and it will change the litigation costs by a few million versus, you know, maybe 5 million instead of, or three or seven, something like that. Yes. Is it dramatically upping it? No. Is it really stopping an error saying, there’s so many patents, I can’t possibly do this? I don’t see the evidence for that. Could there be one case here or there and people will point out one drug with tons? Sure, there may be a few examples, but it’s not widespread. It is not really impacting things. And it’s just something that’s fine in theory, but doesn’t actually work out in practice.
Mel Whittington: In practice, and it doesn’t happen the majority of the time.
Emily Michiko Morris: Yeah, and in fact, the evidence that we found, at least one other study has found, is that companies aren’t using these thickets, these alleged thickets, right? They aren’t using the multiple patents they might have on a drug product or a line of drug products to try to keep generics off the market. And so, we found that in about 30% of the cases that we looked at, the patent holders, even though they still had unexpired patents on a drug product, declined to sue a generic manufacturer for patent infringement because presumably it just wasn’t worth their while. And so instead of trying to use these patents for whatever kind of nuisance value or to try to prolong litigation, the companies are saying, “no, we don’t think these patents are infringed or we don’t think that we need to sue you for patent infringement. We are not going to stand in the way of you getting FDA approval to offer your generic on the market”. And at least one other study found a similar percentage, about 40%, a little less than 40% of cases in which an originator manufacturer could have sued the generic for patent infringement, they declined to do so.
Mel Whittington: Interesting. All right. Well, you all have been extremely gracious with your time. I want to close and ask each of you if there’s one piece of information from your huge body of research you all have led that you wish everyone could be aware of and understand. Is there one thing that really sticks out to you as something that you think is powerful and probably not universally understood? Which I might say that encompasses everything we’ve talked about over the last 40 minutes. But could you identify just one?
Emily Michiko Morris: Yeah, identifying just one. I think so many of the things that we’ve talked about and that we haven’t had time to talk about are incredibly important for people to understand. I would say that the one thing that I would really like your listeners to understand is that we really have created a system in which it’s very easy for generics to enter the market and that we treat pharmaceuticals, despite the fact that pharmaceuticals are so dependent on patent protections, we treat pharmaceutical patents differently than we treat patents in any other technology. And that patents in some ways are easier to circumvent in the biopharmaceutical space than they are in any other technology, in part because of the Hatch-Waxman Act and some of the complex provisions within the Hatch-Waxman Act that facilitate generic entry. So, you talked at the beginning of the podcast about this balance that the Hatch-Waxman Act sought to create between facilitating generic entry and trying to maintain incentives. This is a balance that I think is incredibly tightly wound and that if we start trying to adjust that balance, we may actually be doing more harm than good as Joshua suggested also. And so that’s the one thing I think I really want your listeners to understand.
Mel Whittington: Me too. What about you, Joshua?
Joshua Kresh: Basically saying something very similar. It’s the, is bringing new biopharmaceuticals to market is really time consuming, really expensive and very difficult. And if we don’t allow to incentivize it, no one’s going to do it. So, if we want to continue to have new innovation, we need to protect it. And the IP system is a very important part of that.
Mel Whittington: Yeah, I agree. I think one thing that’s really important for me is for like, we talk about branded drug pricing. You hear media coverage about that new drug gets approved, huge price tag. We don’t often talk about generics entering the market in a positive way of like, wow, now look at the price dropping to pennies of something that was costing, you know, tens of thousands of dollars. So, because of that, I don’t think the lay person or the average person really understands the importance of patents and what that is doing to protect the invention, but also to eventually expire and protect society and so that’s why I really wanted to have you both on the podcast is because I’ve learned so much from you about really the evidence behind these things. These things do expire. And this is really what kind of keeps the innovation chain working both on the side of creating incentives for innovation, but also creating the potential for low, low cost treatments and new innovations. So, with that, I think we can close, and I hope you guys come back on the podcast because I have a lot more to learn.
Emily Michiko Morris: Thanks so much, Melanie.
Joshua Kresh: Will do. Thank you.
Mel Whittington: Thank you.
Thank you for listening to this episode of Perspectives. If you’re interested in participating in future podcasts or would like to learn more about the Leerink Center for Pharmacoeconomics, please email cpe@medacorp.com.
